Tax pay plans cross the line

December 9, 2013

LISBON - While researching real estate tax delinquencies earlier this year, Columbiana County Treasurer Linda Bolon discovered that under her predecessor payment plans were entered into with 18 property owners exceeding what is allowed by state law.

Bolon said it was during a routine inspection of tax delinquencies she discovered the discrepancy in the case of 18 delinquent property owners who entered into plans allowing them to make payments over 10 years, which is double the maximum of five years allowed by law.

State law allows for payment plans of two years to five years, and under the treasurer's policy delinquent property tax owners have the option of paying up in full or entering into a 2-1/2-year payment plan to become current on their back taxes. The delinquent payments are rolled into their current tax bills, which come out twice a year, for a total of five payments to become current on back taxes.

Bolon said in "very rare" instances the treasurer's office policy allows the debtor to set up a five-year payment plan if they can demonstrate a hardship, such as a job loss or medical condition. This is considered a 10-payment plan since the payment is rolled into their current twice-a-year property tax bills.

She discovered payment plans that allowed 18 delinquent property owners to pay what they owe twice a year over 10 years instead of the five-year maximum allowed by law. One debtor has since paid their back taxes in full, while two others have defaulted and their cases referred to prosecutor's office to initiate foreclosure proceedings.

State Rep. Nick Barborak, D-Lisbon, who served as treasurer before Bolon, said he believed they were acting within the law as part of their attempt to work with property owners during tough economic times.

"However, when an individual wished to keep their home or business, we preferred to work with them and avoid more vacant, blighted buildings around the county," Barborak said. "Had we not accepted payment arrangements, no taxes would have been paid on the property, and the delinquency would have snowballed even higher."

Bolon wrote the county prosecutor's office in April and again in August seeking a legal opinion on how she should proceed on the matter. She also asked for advice on what to do in regard to a related section of law that prohibits payment plans from being entered into with properties that are already in foreclosure or subject to a tax lien because some of those properties fell into the two categories.

After failing to receive a reply from the prosecutor's office, Bolon contacted the state auditor's office, which told her verbally she was required to renegotiate the payment plans so they complied with the law. This was followed up with an email.

Bolon also found that of the 439 property owners on payment plans, 192 are on five-year plans, which she believes to be high since the longer payment plans are only supposed to be granted rarely and in hardship cases.